Pandora -3.6%; audience metrics show slower listener hour growth


Pandora (P) had 75.3 active listeners in February, +3% M/M and +11% Y/Y. (PR)

Listener hours for the 28-day month rose 9% Y/Y to 1.51B. That's a slower growth rate than the 13% posted for January.

Pandora's share of total U.S. radio listening was 8.91%, up from 8.57% in January (thanks in part to seasonality) and 8.25% a year ago.

The company says it will discontinue sharing its monthly audience metrics after providing May numbers. Quarterly numbers will still be provided.

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Comments (49)
  • PeakOiler
    , contributor
    Comments (299) | Send Message
     
    Pandora growth slowing dramatically, company response? Stop providing data on growth! That's really gonna work.
    6 Mar 2014, 09:24 AM Reply Like
  • Humble Eagles
    , contributor
    Comments (2750) | Send Message
     
    Actually it isn't just slowing, it actually dropped month on month for listeners and hours, no?
    6 Mar 2014, 11:14 AM Reply Like
  • dgulick
    , contributor
    Comments (2256) | Send Message
     
    They will still provide it, just quarterly, not monthly. Considering no other streamer will even do that (Spotify, Apple, Google, Clear Channel, any of them!!), this is not negative news.

     

    Also, after looking at numbers, this is VERY solid growth. m/m they grew their share of US radio from 8.57% to 8.91%, +34 basis pts (+4% m/m), compared with an average monthly basis pt increase over the past 6 months of +25, despite launches/free-promotions from Apple, Spotify, Beats, and Rdio. Also, their average hours/listener/month (Andrei's favorite metric) increased +3.1% m/m *and* they added +1.9M active listeners in a short month!
    6 Mar 2014, 11:16 AM Reply Like
  • dgulick
    , contributor
    Comments (2256) | Send Message
     
    That should have read average hours/listener/*day* (Andrei's favorite metric) increased +3.1% m/m.

     

    (Feb is a short month, which is the *only* reason for the "decline" in listener hours).
    6 Mar 2014, 11:20 AM Reply Like
  • Humble Eagles
    , contributor
    Comments (2750) | Send Message
     
    I missed that dg; thx for pointing out the short month. Still sounds like growth is slowing, though, particularly when viewed sequentially.
    6 Mar 2014, 11:24 AM Reply Like
  • dgulick
    , contributor
    Comments (2256) | Send Message
     
    @Humble, m/m dropped but Feb (28 days) is -9.7% shorter than Jan (31 days), skews Feb metrics. Key metric is P's share of US radio listening, 8.9%, +34 basis pts.
    6 Mar 2014, 11:25 AM Reply Like
  • dgulick
    , contributor
    Comments (2256) | Send Message
     
    The comp month, Feb 2013 was a blowout, +57 basis pts m/m, and still holds the record for ave hrs/listener/day at 0.73, which prompted P to implement the 40hr cap on free listening on a mobile device until they could improve monetization. This lasted Apr-Aug of last year and put a huge dent in market share (they averaged -30 basis pt m/m drops in share of US radio for these months, dropping from 8.25% to 7.04%). Since these next few months will be comping to the depressed listening caused by the cap, we will actually see an "increase" in growth (I predict better than +30% y/y this summer). My point is, be careful with y/y numbers as a determinant of "slowing growth".
    6 Mar 2014, 11:35 AM Reply Like
  • Big DD
    , contributor
    Comments (132) | Send Message
     
    The RATE of the growth dropped, but it still grew. It is just not growing as fast.
    6 Mar 2014, 11:54 AM Reply Like
  • manicdvln
    , contributor
    Comments (1487) | Send Message
     
    40$ stock with no profits and stagnating growth. Stock is excusing everything even growth now.

     

    So what's left? Hope? We going long on hope?
    6 Mar 2014, 12:13 PM Reply Like
  • manicdvln
    , contributor
    Comments (1487) | Send Message
     
    What a scam this stock this. Analysts all pumped up their targets into 40s, an evaluation beyond perfection. Blamed January bad metrics on seasonality, and now with Feb drop they have no excuse so now Pandora going to remove monthly metrics all together.

     

    This stock is a giant ponzi scheme. High PE bubble garbage with no growth, no profits, no patents, no ownership in content, no moat, no partnerships.

     

    What a scam.
    6 Mar 2014, 09:41 AM Reply Like
  • Quoth the Raven
    , contributor
    Comments (2063) | Send Message
     
    QTR - 1
    Rocco Pendola - 0

     

    http://seekingalpha.co...
    6 Mar 2014, 09:58 AM Reply Like
  • Arnbjorn Ingimundarson, CFA
    , contributor
    Comments (215) | Send Message
     
    QTR - You argued your case better than Rocco did, and I agree that Pandora is seriously overvalued. However, score is kept with dollars and cents and P is up almost 40% YTD, even with today's drop. It is not time for a victory lap quite yet.
    6 Mar 2014, 10:20 AM Reply Like
  • dgulick
    , contributor
    Comments (2256) | Send Message
     
    @Quoth, Wrong. Check the scoreboard, since that article P +40%.
    6 Mar 2014, 10:47 AM Reply Like
  • Sirvasq
    , contributor
    Comments (331) | Send Message
     
    My 35 and 37 puts bought at yesterday's 52-wk high +125%.
    6 Mar 2014, 10:12 AM Reply Like
  • dgulick
    , contributor
    Comments (2256) | Send Message
     
    Hope you cashed them in, now that everyone has had a chance to look at this news, stock is advancing.
    6 Mar 2014, 11:18 AM Reply Like
  • manicdvln
    , contributor
    Comments (1487) | Send Message
     
    Spotify buys The Echo Nest for smart music curation GAME OVER FOR PANDORA http://bit.ly/NAD1tn
    6 Mar 2014, 10:30 AM Reply Like
  • dgulick
    , contributor
    Comments (2256) | Send Message
     
    Considering iHeartRadio has been using Echo Nest for 6 years and P's growth did nothing but accelerate during this time (a 40x increase in use), I think you might (just maybe) be overly stating the possible effect of this news!
    6 Mar 2014, 11:03 AM Reply Like
  • manicdvln
    , contributor
    Comments (1487) | Send Message
     
    Keep telling yourself that. Spotify now has best of both worlds, curation and ondemand. Only matter of time all those kids listening to Pandora will move to spotify. There is no brand loyalty these days, people will flock to whatever gives them the best value/service.

     

    Keep switching from subjective opinion to hope and vice versa.

     

    Fact is growth has slowed, competition rising, and big techs are taking steps shutting out Pandora from their ecosystem.

     

    For the price of the stock, you would think everything going right for Pandora but its the complete opposite, and this is why this debate exists.
    6 Mar 2014, 12:17 PM Reply Like
  • LARadio guy
    , contributor
    Comments (70) | Send Message
     
    "spotify has the best of both worlds"... only they have 30% of P's scale... Scoreboard. growth has slowed because it is BIG AS HELL and no one can keep growing at such an incredible pace.
    6 Mar 2014, 02:20 PM Reply Like
  • manicdvln
    , contributor
    Comments (1487) | Send Message
     
    incredible pace? I thought they had only 8% of radio market, and all this time here I thought you were blabbering about that online music was the future yet growth stagnating? What gives?
    6 Mar 2014, 02:35 PM Reply Like
  • LARadio guy
    , contributor
    Comments (70) | Send Message
     
    What, no comment on how much bigger P is than Spotify? You are missing the point, no surprise. 75 million active users (umm, like 50 million more than Spotify) which represents "only" 8% of the US Radio market (actually 8.91% up from 8.25%)... that's a lot of room for growth. and i don't know of a single media outlet in the world that would not kill for 8% of the US Radio market. You're talking about one entity (P) taking on every single radio station in the country... 8% is a huge number (sorry, 8.91%) and shows that there is plenty of room for continued growth.

     

    Answer this for me. if online radio is NOT the future, why does everyone want in so bad? Google? Apple? it's because they see no money there, right? when P's numbers actually start to plateau or start going down YoY come talk to me. you can't continue growing at clips of 20% YoY when you become as large as P. You always seem to forget the law of large numbers when talking about P.
    6 Mar 2014, 02:50 PM Reply Like
  • JLR.TX
    , contributor
    Comments (4) | Send Message
     
    I think Internet Radio does have a place and will grow... but it won't replace local radio. Reasons people listen to local radio: local news, local weather, local traffic, local talk radio, local sports, other local issues etc.

     

    Pandora is starting to roll out local ads but until they can begin developing niche radio stations for local news, sports, talk, traffic... there's always going to be a portion of the radio market that they're going to be locked out of.

     

    As a consumer, I love Pandora. Looking at how their business is being run though, I have mixed feelings (too much spending). As an investor, I think their stock is waaaay overvalued. Yes they're growing, no one is questioning that. But for their share price to make sense, they have to keep up double digit growth for several more years. That's going to be tough to do, especially with Amazon right around the corner and rumors that they're going to include unlimited music with Prime.

     

    By the way, on a side note... Clear Channel Communications has 17% share of the US radio market.
    6 Mar 2014, 06:00 PM Reply Like
  • dgulick
    , contributor
    Comments (2256) | Send Message
     
    <<Reasons people listen to local radio: local news, local weather, local traffic, local talk radio, local sports, other local issues etc.>>
    That's true for an older demographic, but most people get all of these from the internet now.

     

    <<But for their share price to make sense, they have to keep up double digit growth for several more years. >>
    I disagree, P's current 9% share of US radio at FM ad rates would (will) be $1.5B/yr

     

    <<Clear Channel Communications has 17% share of the US radio market. >>
    And declining is valued at $17B market cap, P at 9% share of US radio and growing is valued at $7B.
    6 Mar 2014, 06:08 PM Reply Like
  • mikiveliki
    , contributor
    Comments (21) | Send Message
     
    Hey LARadio guy, don't you see something is not quite right with the maths: "75 million active users (umm, like 50 million more than Spotify) which represents "only" 8% of the US Radio market (actually 8.91% up from 8.25%)..." If 75m represents 8.91% of the population, the total population should be 842m. Wikipedia says the US has 318m population. How many listen to the radio? How many are online?
    6 Mar 2014, 06:35 PM Reply Like
  • dgulick
    , contributor
    Comments (2256) | Send Message
     
    Same mistake @manic made. 8.9% is P's share of *listening hours*, not their share of number of users. (meaning, of the 17B hrs of radio listening for the month including SiriusXM, FM and streamers, P had 1.5B, or 8.9%, get it?) Also, remember, many P users are also FM users, the important metric is, how much time is spent on each!
    6 Mar 2014, 06:41 PM Reply Like
  • LARadio guy
    , contributor
    Comments (70) | Send Message
     
    it wont replace radio, but it will change the landscape forever. The "local" feel that sets radio apart is dying. Clear Channel has tried to cut costs by cutting down on "local content" like morning shows and "voicetracking" talent from other markets. this saves on content costs, production costs, talent costs, etc. Clear Channel on another note ought to have 17% of the radio market considering how many stations they own... 850 down from over 1200 back in the early 2000s. Even with 850 different radio stations to stream, iHeart does not come anywhere close to Pandora as far as scale is concerned.
    6 Mar 2014, 06:52 PM Reply Like
  • dgulick
    , contributor
    Comments (2256) | Send Message
     
    <<change the landscape forever>>
    Exactly. FM radio will still be around, just like newspapers are. But as we now know, newspaper ad revenues have been decimated as everyone switched to getting their news from the internet. Where did the money go? Essentially that money went to Google (and others), same thing here, FM radio ad money will go to Pandora (and others). Will look something like this:
    http://bit.ly/1cGg6Tw
    6 Mar 2014, 07:13 PM Reply Like
  • MM3357
    , contributor
    Comments (7) | Send Message
     
    This is still one of the largest most active social networks out there. People tire of the need to FB or tweet but music never goes out of favor.
    6 Mar 2014, 11:15 AM Reply Like
  • manicdvln
    , contributor
    Comments (1487) | Send Message
     
    Yes music doesn't go out of favor but has nothing to do with business model or service value.
    6 Mar 2014, 12:18 PM Reply Like
  • Andrei Volgin
    , contributor
    Comments (624) | Send Message
     
    @Doug

     

    Last year Pandora gained more users in February than it lost in January. This year it came up 0.9m short.

     

    Year over year growth in listener hours is declining for 9 months in a row. Growth in total listeners is declining for 13 months in a row - without a single interruption. This is a definition of a "trend".

     

    Single digits growth for a company that does not even have a P/E, because it expects to lose money again this year, is not a good story. One quarter of declining revenues or ad rates, and this stock will crush to $10 or less.
    6 Mar 2014, 01:10 PM Reply Like
  • dgulick
    , contributor
    Comments (2256) | Send Message
     
    Extrapolate that "trend" if you wish, but you know as well as I that their metrics were severely effected by 2 things: insane growth in late 2012/early 2013 and the limit placed on free listening (purposefully to thwart this very growth!). My model has a bit more fidelity and I guarantee you that this "trend" reverses within 2 months!

     

    (Frankly, I doubt anyone picks up on this, just like folks sold today on great metrics, the stock will likely pop on this "trend reversal" (I put that in quotes as well, because it is just so ridiculous to do a y/y comparison to capped listening. I'll also add that Feb metrics were above my estimates, overestimated Beats launch, just like I did iTunes Radio, Rdio and Spotify, the Pandora train rumbles on!)
    6 Mar 2014, 01:57 PM Reply Like
  • dgulick
    , contributor
    Comments (2256) | Send Message
     
    @Andrei,
    Regarding this topic, this from Brian McAndrews from Morgan Stanley conference transcript:

     

    "So last year we had a unique situation with our growth that we actually we were working to slowdown and so I think we -- as we go into Q2 and Q3, we think we will see reacceleration in growth from what we saw in February."

     

    http://bit.ly/1hUBBFi
    7 Mar 2014, 03:08 PM Reply Like
  • Andrei Volgin
    , contributor
    Comments (624) | Send Message
     
    The growth will not "re-accelerate" - the comparisons will get easier. Pandora has reached its plateau. This is obvious to everyone except you and a few Wall Street analysts who keep pumping up the stock. Even Pandora's insiders are selling non-stop for 2 years now. Not one of them bought a single share to benefit from this "future growth".
    7 Mar 2014, 03:18 PM Reply Like
  • manicdvln
    , contributor
    Comments (1487) | Send Message
     
    Game over http://bit.ly/1kCRzXx
    7 Mar 2014, 03:35 PM Reply Like
  • dgulick
    , contributor
    Comments (2256) | Send Message
     
    @Andrei,
    When doing a y/y comparison, growth will "re-accelerate", in as much as it has "slowed", simply by comping to a year ago number that is nothing like a plateau, yet you are trying to extrapolate this "trend" with your "declining growth", if y/y growth stops declining, then there is no "trend". That's precisely what will happen, I'll remind you when we get there.
    <<plateau>>
    Plot P's growth in share of US radio, tell me what you see. NO PLATEAU, a bit more like A MOUNTAIN! They've grown market share 27% since last summer in spite of numerous competing service launches with all kinds of "competitive advantages" (deep pockets, native platforms, social connectivity, relationships with labels, etc, etc). Basically P returned to the growth rate they had before implementing the cap, which is stealing 3% of US radio share per year! (And those ad dollars will follow).

     

    And regarding insiders, as you know, in many cases the majority of their net worth is tied up in a single stock, so they've locked in some gains, shares are up 425% in case you missed it, but they are still heavily invested.
    7 Mar 2014, 05:01 PM Reply Like
  • manicdvln
    , contributor
    Comments (1487) | Send Message
     
    A mountain has a cliff on the other side. Take profits while you can, because people who climb the highest mountain don't stay there, they go back down and all they leave behind is garbage which reminds me to tell you something.

     

    Your arguments are garbage. Ever notice you are the only guy here who is defending this useless company while everyone else including management are putting where their mouth is and dumping their shares asap.
    7 Mar 2014, 05:17 PM Reply Like
  • Andrei Volgin
    , contributor
    Comments (624) | Send Message
     
    Insiders are selling since the stock was $8. You don't sell at $8 if you expect the stock to go up to $40. Either all insiders are not very smart (which does not bode well for the company, does it?), or they know that this is a house of cards that can crash at any moment.
    7 Mar 2014, 05:18 PM Reply Like
  • dgulick
    , contributor
    Comments (2256) | Send Message
     
    <<You don't sell at $8>>
    You do if you need the money! Can't buy a house (or pay your kids tuition, or whatever) with stock options!
    <<Either all insiders are not very smart (which does not bode well for the company, does it?), or they know that this is a house of cards that can crash at any moment.>>
    Interesting logic, so we should just short any company in which insiders are selling? If they sold low, they're not very smart, if they sold high, they are smart because they know it's going to drop? Is that how you decided P was a short?
    7 Mar 2014, 05:56 PM Reply Like
  • Andrei Volgin
    , contributor
    Comments (624) | Send Message
     
    Insiders sold shares worth tens of millions of dollars. This is not about hungry kids at home.

     

    And yes, if ALL insiders are ONLY selling, investors should be very concerned.

     

    And no, there is a very long list of reasons why Pandora is a bubble waiting to burst.
    7 Mar 2014, 06:02 PM Reply Like
  • manicdvln
    , contributor
    Comments (1487) | Send Message
     
    Hungry kids!!! poor Pandora management with their millions. What would they do if it weren't for the secondary offering.

     

    Why hasn't any insider bought on open market price? You said yourself, 70$ right around the corner! If I was Pandora i would load up!

     

    Moreover, if everything is rosy why the management shuffle?

     

    You starting to sound like a paid shill
    7 Mar 2014, 08:46 PM Reply Like
  • manicdvln
    , contributor
    Comments (1487) | Send Message
     
    Wait a minute, first you say Beats Music and Spotify not competitors to Pandora then you say the drop was caused by Beats even though you say Pandora is amazing? What gives???

     

    Or maybe Dec listeners popped because everyone ran Christmas songs non stop in their house and once that was over, Pandora app was forgotten by users since there is numerous apps on their mobile phones that play the songs they want, not forced bunch of crap you don't want to hear.

     

    You estimated that Feb would beat Dec metrics, doesn't seem like it hit your expectations nor can numbers back up your ridiculous 70$ PT. Btw, how does that model work anyways? Did you just increase the multiple? Maybe CEO finds a goose that lays golden eggs?
    6 Mar 2014, 02:16 PM Reply Like
  • dgulick
    , contributor
    Comments (2256) | Send Message
     
    Read the post, I didn't say "drop was caused by Beats", I said I thought it would have *more* of an effect than it did (I thought more would not tune in to Pandora because of Beats, but Beats is really really bad).
    6 Mar 2014, 02:20 PM Reply Like
  • manicdvln
    , contributor
    Comments (1487) | Send Message
     
    Why would have an affect? They are not direct competitors? So where did those listeners go? Let alone why they aren't adding listeners.
    6 Mar 2014, 02:36 PM Reply Like
  • dgulick
    , contributor
    Comments (2256) | Send Message
     
    Because Beats was free... for 7 days. And P is adding listeners, +1.9M actually, in one month.
    6 Mar 2014, 03:10 PM Reply Like
  • manicdvln
    , contributor
    Comments (1487) | Send Message
     
    Once again if they are not direct competitors, why would anyone go to Beats?
    6 Mar 2014, 03:12 PM Reply Like
  • LARadio guy
    , contributor
    Comments (70) | Send Message
     
    because it's a music service... and there will always be cross-over, "direct" competitor or not. Personally i think they are all competitors, but some will be gone in a matter of years if not months. But the Beats model is the same as Spotify, not P. Also, the massive drop of Beats in the app store proves that the majority of people who tested it only did because it was free... and Pandora is the a superior service and THE consistent top-performer in the category.
    6 Mar 2014, 03:24 PM Reply Like
  • dgulick
    , contributor
    Comments (2256) | Send Message
     
    Exactly, they are competitors in the same sense that radio competes with CDs/digital sales, they both compete for your ear's time, but they are different markets with different price-points and different target audiences, and can therefore coexist. Spotify is different as they offer a Pandora-style radio service, but it is clearly inferior, as LARadio pointed out with marketshare numbers. But if something is offered for free, people will try it, but when they finally have to pay (3x the cost of a P subscription) most drop it.
    6 Mar 2014, 03:50 PM Reply Like
  • manicdvln
    , contributor
    Comments (1487) | Send Message
     
    If that is the case than anything on your mobile phone is a competitor, as any distraction keeps your from listening to Pandora, albeit be twitter, facebook, games, youtube...

     

    Which also means that mobile ad money will go to apps that get most exposure on phones. Once again, mobile ad space too crowded, Pandora ad prices will tumble as costs keep rising and it is now obvious that they no longer growing fast enough to ever squeeze a profit.
    6 Mar 2014, 04:12 PM Reply Like
  • LARadio guy
    , contributor
    Comments (70) | Send Message
     
    Beats Music has completely fallen off the map and plummeted in the app store. it is a competitor to Spotify, not P, and at this point is irrelevant. "Pandora app was forgotten"... the #1 music app with over 75 million actives in Feb? not a lot of people "forgot".
    6 Mar 2014, 02:22 PM Reply Like
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